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No Special Session for Legislature

For the first time since 2010, the Alaska State Legislature has wrapped up in time. With Republican majorities in both chambers, legislators took full advantage of their 90 days in Juneau. They approved 71 bills, a $2.2 billion capital budget, and a 737-mile in-state gasline.

Most importantly, the legislature passed a bill that would give oil companies a tax cut. Gov. Sean Parnell has been fighting to overhaul the state’s tax structure for years, arguing that a lower rate would encourage more investment and more oil production.

On Saturday, the House approved the tax legislation on a 27 to 12 vote. Anchorage Republican Mia Costello had harsh words for the existing tax structure, arguing that the policy of raising tax rates as the price of oil goes up was discouraging investment.

“Progressivity is our enemy,” said Costello. “Progressivity is what is robbing our future of the ability to pay for schools, and roads, and troopers.”

A mix of Democrats and coastal Republicans in both chambers of the legislature didn’t agree with that. Sen. Hollis French, an Anchorage Democrat spoke against the measure, saying that it could hurt the state’s treasury.

“I’m very concerned that this bill will bankrupt the state,” said French. “I know in my heart this will lead to an income tax. I know in my heart this will lead to the loss of our permanent fund dividend, okay? I know for a fact that’s beyond contention that this will lead to greater profits for the oil industry.”

Under forecasted prices and production, the tax cut comes out to at least $3.5 billion over five years. Oil companies have called the bill a “game changer,” but have not made specific commitments to increase production.

The legislature also passed plenty of other big-ticket items this session. They approved a bill advancing an in-state gasline project, and they put together a financing program to get natural gas from the North Slope to the Interior.

They also okayed a $2.2 billion capital budget. That was expected to be a vehicle for a comprehensive education package that was frequently discussed by leadership but never showed up. On the last day of session, the House voted to create a task force to look at how educators should be graded and what can be done to improve school performance. The finance committee also allocated $21 million in grant money to schools for safety and security spending.

Rep. Bill Stoltze, a Chugiak Republican who co-chairs the committee, says the decision to fund schools in that amount was pragmatic.

“That’s out of our capital budget, and that’s about what we had left.”

Education isn’t the only policy that didn’t get completely taken care of this session. The House hit the brakes on a bill that would limit Medicaid funding for abortion, after it passed the Senate. The Senate kept a bill that would advance the Knik Arm bridge project in committee, after it received and damning audit that prompted the House to hand control of the proposal off to the Alaska Housing Finance Corporation.

The Senate also delayed a vote on one of the governor’s bills to limit who can secure water reservations. Members of the fishing industry and residents of the Bristol Bay region have come out against the legislation, saying that the proposed changes could make it easier to permit Pebble Mine.

But overall, this legislature passed nearly twice as many bills as the previous one did over the first session. House and Senate leadership credited that decline in gridlock to having Republican majorities in both chambers.